Episode # 259 – What’s Next: How the Pandemic has Accelerated Change in Your Business and Ours

September 25, 2020

Steve discusses the new work environment many of us are experiencing as a result of the pandemic. He also shares strategies for dealing with the economic shift taking place, accelerating plans for businesses and careers, and how COVID may impact retirement.  Then, Steve shares an important announcement regarding Cordasco Financial Network and how the pandemic has impacted the pace of change at the firm. Steve explains how his 5-year plan for growth and expansion has been achieved in just 5 months, and the benefits realized from those changes.

Listening Time 24 minutes

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Transcript:

The content shared on your life, your wealth network reflects the views of the host and guests of the program only and are not necessarily the views of Cordasco Financial Network or its advisers. This media production is educational in nature and should not be construed as financial, legal or tax advice or a solicitation or presentation of sale of any financial products or services. Please consult a professional prior to making any financial tax or legal decision.

Welcome to the Your Life, Your Wealth network, helping you find clarity and comfort for your life. And well, now here’s your host, financial adviser and CEO of Cordasco Financial Network, Steve Cordasco.

And welcome to the Your Life Your Wealth podcast. Thrilled to be with you today. I want to cover the topic today and discuss what many of you had asked me, and that is to cover the new work environment and the economic shift that’s coming as a result of the COVID 19 pandemic. Many of you want to know what businesses are doing out there. I guess some of those business owners of you that listen regularly are finding yourselves in this kind of new environment. But I don’t want to limit this just to what other businesses are doing. I want to talk about the shift. And it might be a paradigm shift going on right here with how businesses are operating, but also how individuals just like you are making decisions, because I’m seeing more and more individuals now making a decision of what they want to do with their career and making drastic career choice changes. And I don’t mean drastic in a bad way. I just mean that it’s something that, frankly, might have been back of mind to make some work career changes. But all of a sudden, these back of mine, maybe longer term plans due to the pandemic due to COVID 19 have all of a sudden been fast forwarded. So I want to cover a fair amount of turf today and try to give you some guidance and some ideas of what’s happening out there and how it might relate some of this stuff to you and what you might be wrestling in with your career, whether you retire, whether you make a change in your career. If you’re a business owner, what strategy changes do you make within your business due to the covered environment that we’re dealing with? So I want to talk about the changing work environment. I want to talk about the changing workforce also and as a result, a changing economy that has been born out of this pandemic. What does it all mean to you and your money?

You’re going to come away at the end of this podcast with a little bit more certainty of what it means to you. That’s my hope, anyway. I’d like to ask, what are some of the strategies that you can do now to take advantage of a shift in the business economy, in the workforce? Because there’s things happening out there. Let me give you one. The shift in the workforce and as a result, the shift in the economy, the academy with lower interest rates, a shift in workforce, with people now working a little bit more closer to home and are in their own environment, has stirred a huge bull market in real estate. And it’s interesting because I’m talking with so many of you who are on either side or both sides of a transaction and real estate. And it goes like this. Never thought I would sell my house right away. But guess what? My neighbor got a lot of money. Do you think I should sell now? I didn’t think I’d do it for another three or four years because of my age and where I am at work. But all of a sudden, prices are where I never thought I’d seen them be. Well, that takes thought. It takes analysis to make that decision to sell because of something that’s happened so quickly, that’s happened right now. See, it’s called quick decision because here we are in this environment that we’ve never anticipated being called a covert pandemic called a Federal Reserve. Who is so worried about what the economy will look like as a result of it has brought interest rates all the way down. I know someone and you probably know them, too. A very well-known local business banker. How much money is he had? I don’t know. Maybe close to a billion dollars. Alan, just for sake of conversation, build his wealth and banking, starting banks, getting out of banks who bought a big house and did it with a mortgage. Why? Because interest rates are so low. Prior to a pandemic and rates not being down, I would bet my bottom dollar that that individual would have never gotten a mortgage. They would pay cash to. We are in interesting times. I’d also today I’d like to use an example of the company. I’m part of Cordasco Financial Network, how I’ve taken a look at my five year plan for the firm and what adjustments that we’ve made and accelerated because we’re in a pandemic. So if you stay with me, I’ll share with you that big news and it’s big in my opinion. I’m also finding, as many of you have reached out to me in that you want to talk more about retiring, admit kov it. I’m seeing it. I’m seeing more and more of you throwing in the Townsing. I just this isn’t for me. I didn’t sign up for this. I didn’t sign up for having to learn technology in today’s world. They didn’t sign up for the pressure that I’m under. Frankly, I didn’t sign up for my work ethic and the way I go about things, not aligning with other generations I work with. And now by working at home or working. Remotely and working with more and more people under their own personalized pressures of how they’re dealing with the pandemic that magnified with a heated political environment has caused many good employees like you to say, I want to do this anymore. The statistics are showing that more workers are leaving their jobs early and not by choice. This wasn’t part of the plan right now. So when I say not by choice, it’s not necessarily getting laid off. Although keep in mind, for many of you listening, you’ve responded to me as well, saying, hey, my company’s having some downsizing or early outs. They’re struggling because of the economy. I’m worried I might lose my job. That’s in the mix. But guess what? There are also many of you out there are saying I might be leaving my job early and it’s not my choice. I know I’m the one who’s doing it, but I wish it could have worked for me. I don’t like the environment that I have to work in at the moment, and therefore I may walk away from it. These are struggles that are going on during the pandemic. Some of you expressed frustration with that new one work environment, as we discussed, saying it’s just not working for me. Give me an example. A school teacher reached out just recently. She happens to be married to a business owner in the beginning weeks of the pandemic and a shut down. The business owner, her husband trying to keep names out of it, had tremendous anxiety. Very worried about his shipping business and moving products and packages and figured not going to be shipping anything. Stores are going to be closed and kind of took on a kind of a worst case situation and tried to get very prepared for it, said thankfully. Well, here we are. What maybe? Almost six months, five months into this pandemic in March, April, May, June, July. Yeah, we’re well over seven months. His business is thriving. She’s done as a schoolteacher. I’m out. Get me out. I want out. Can’t do this anymore. Totally different result today than when we were in week three or week four of the beginning stages of a pandemic. Like I said, the business is doing well. During COVID business is actually up. But teaching kids remotely was such a pain point. And stressful. And frankly, she said the kids aren’t learning. So what’s the point? I do this because I want that next generation to learn. I’m trying as hard as I can. I do it to help the kids and they’re not getting what they need. And it’s frustrating. Technology is not working. You try to keep their attention. It’s just too difficult. And I’m at a stage of life where, yeah, I would have like to put four or five more years into it, but I’m done. Many of you have reached out to our team asking that key question. Hey, Steve. Hey, Des. Hey, Timmy. Hey, Jim. Hey, Brian. Hey, John. Hey, Evan. Hey, Dennis. Am I able to retire? Can I retire? Can you tell me if I can? Some of you who are not as frantic about it expressed that your company is talking about having some downsizing. So we’ve gotten some some of you calling to say, I’m not quite sure, but I’m hearing some noise if something happens in my prepared. And some of you’ve been suppressing a lot of frustration with Zoom and working from home and trying to get business done.

Many, many, many are wondering what they’re going to do next. What you plan to do next is specially those 50 years of age and up. So my advice is this to you is to try not to make a quick emotional decision, think it through, and better yet, get someone who’s unbiased, maybe not a spouse or a family member who you can trust to share your thoughts on why you might be looking to make such a big life change that might not have been part of the timeline of your game plan. Look, I think everybody thinks in their mind when they want to start to slow down and maybe make a career change or retire. It’s not something they do in a quick, short moment, because there’s this new thing that’s happened that has changed the world. But that’s exactly what’s happened. We get hit with a pandemic and now, OK, we’ll get through it. We thought to be short lived. Now it’s starting to drag on. And as it drags on, more and more of you are in that moment of tapping out for lack of a better way to put it. And that’s okay. I read a story that I was going to bring to you today, and they know how to do it because it boggles my mind that somebody would say, jeez, I thought I was going to retire. I was ready to retire during the pandemic.

I about a month and a half ago, is getting all geared up. And then the market corrected this recent market correction. So now I can’t retire. I want to please hunt down that person and say, wait a minute. If you think it’ll. Comes down to a number by your your financial advisers. It’s not about having the right number. Why would you continue to want to do something you don’t like in your miserable while you’re doing it because you’re waiting for the stock market to get back to a better place? That means the stock market will control your whole retirement. You’re not going to have a successful retirement if every day you’re wondering what you can do based on what the stock market does. It’s not supposed to be that way when somebody tell me. Did we all of a sudden get to a point that the stock market is the indicator of whether you retire or not? Or the indicator in retirement whether you can travel one year or not, whether you’re on spam or filet mignon. So find someone who can help you see clearly and hope you make some choices while you’re thinking about change. There’s a tool that we like to use that I want to share with you. And this is some advice that I have for you. I would tell you to talk through with whoever that person is that you can trust. And maybe it’s a team of people and really find out why you’re looking to make a change. Now, also run numbers so that you can see where you are and not have to worry about what the stock market does day in and day out. We have something called the Your Life, Your Wealth canvas. It’s an excellent tool. Many of you listening who work with our firm. You might know this as our retirement sensitivity. I like calling it the your life your wealth tool, because on one page you can see your life. You can see your wealth. You can see as your life works. Each year over year, as your life is happening, you see what your wealth does on one page. And that’s a good good indicator and a good anxiety muzzle to show you at any moment of time where you are. So by using some innovative tools and by also being able to talk to others who know a little bit about it can help you make a good decision in times where things are emotional. So keep that in mind. I’d be more than happy to send you some information on the your life, your wealth canvas. You can just reach out to asksteve@cfnplan.com. Hey, I need to talk taxes real quick because again, COVID Pandemic have many people working in different types of work environments and millions of Americans are working from home during the COVID pandemic. And many of you listening have asked me questions with regards to working from home, like the number one question I get. Can I get a home office deduction? Can he answer for many of you is no. And every time I have to say no to that, I get like a pushback on the other line. Some anger or if I’m on a own call with somebody, it’s hard to accept. No, you can’t. Some might be able to. Which you have to do it a certain way. So some of you. Yes, you might get that. But here’s the bottom line. To qualify for a business home office deduction. Are you ready for this? The Home Office must be the principal place of business or a place to meet. The people you do business with, your clients. More importantly, the taxpayer must use the Home Office exclusively for business. So if little Johnny or Sally, who is home because of school and you’re trying to get a business deduction, but yet your clients who are on a Zoom call, see them running around behind your chair and doing a little spoofing on your little photobomb. Sounds like it’s more of a home than an office. And it’s important to note that you also have to deal with the state side of income tax. There’s no state income tax in the state of Florida, for example, but New Jersey can run anywhere from three to 11 percent, P.A. three percent north in some areas, Philly’s got its own personal tax. So here’s what happens. You know, if you’re working from home, not your home office. These states could come in and say you’re just working there because it’s convenient. We’re still taxing you. City of Philadelphia could do that to someone who decides they’re working in from home and not driving into Philly. They’re working from their home. Well, you’re working there cause it’s convenient. How are businesses adapting? And if you’re a business owner, what have you done? Have you made any changes? Have you adapted? I’m finding many businesses are not adapting. They haven’t thought about change. They’re waiting for the environment to go back to normal and then they’ll get their business up and running. That’s the type of leadership they are. That’s what they’re doing. And for now, many of them are hurting. I’m impressed because there are some other businesses, many other businesses that have taken the pandemic and adjusted to it. They’ve gone out. They’ve adapted. And they’ve repositioned to survive until we get back to normalcy of corporate benefits. They’ve been tracking business behavior during this pandemic and they’ve also been issuing guidance on how to respond to the COVID 19 pandemic and what it means to business. Their CEO is Julia Sweet, and she outlines how a center operates in virtual team structure, has a crisis management committee and focuses on staff retention with the moral. Here is businesses that are adapting and trying to run as a business in this new environment are doing much better than those that are not. And then talking about how businesses are adapting to COVID 19 is interesting to me. There are now good case studies on what businesses made smart decisions and who have made blunders. We’ll call them out at a different time. But I thought it would be important for me to share with you some very important news that I did as a business leader at Cordasco Financial Network. We had a long term plan to expand and grow into more markets. Our clients were wanting us to have more convenient locations to where they are from a management standpoint. We had a five year plan to expand into other markets, move more into suburbia Pennsylvania, expand a footprint in New Jersey down to the Jersey Shore area through Haddonfield, and to go into other areas where our clients are and by popular demand. Florida was one of those markets. I remember three or four months just prior to covered, we had been two months prior to the cove at Pandemic. Me and Dennis Jablonoski were down in Florida looking at space. I went down with some other folks on our team, looked East Coast, look west coast. Then no sooner did we look at crunching our numbers and how that expansion could work in the pandemic hits puts everything on hold. Well, about midway through, I thought, why should an expansion be put on hold? Who knows how long we could be in this environment? It’s not time to wait. I elected to fast track that expansion as a result of the COVID crisis. A five year plan went to five months. As my wife likes to say, it’s nice being married to Steve. His five year plan went to five months. Well, we have an opportunity and it’s a little bit drastic. Many clients of Cresco Financial Network want to be served outside the city of Philadelphia. They’ve expressed that others were starting part of the pandemic to come into the city of Philadelphia. Many don’t want to come into this city and many were saying we spend a lot of time in the Sunshine State of Florida. And if you ever get down there, would love to be able to have our meetings there. With that said, I kicked our long term plan into gear. We have subleased our Philadelphia flagship office that we started our firm at three Logan Square right in the heart beat Philadelphia. We noticed over the years that we had almost a 70 percent drop off of people visiting the office. What we found is that so much construction going on in Philadelphia, it’s a long event. Many people having to come in and with the Comcast centers being built. It just got to be a burden. So I figured the next time the lease is up, I probably would not renew it and we would start expanding into other areas and create what I classified as convenience offices. Therefore, during the pandemic, I decided I’m not going to wait three years for our lease to expire. I’m going to try to sublease this. And I got left that. Who’s going to sublease space in Philadelphia when the world’s coming to an end? It got subleased pretty quickly and that allowed us to open our multiple office strategy. And we will have anchor offices and Conshohocken, Bucks County, Haddonfield, New Jersey, and ready for this. Naples, Florida. We will have other convenient locations. We’re calling these are convenience offices and we do those by appointment. Radnor, Pennsylvania, Berwin P.A., Brigantine, New Jersey, Center City, Philadelphia. West Palm, Florida. And Stuart Beach, Florida. Now, what I mean by this is that I’ve got to be careful and catch my words because we’re not active offices right now. We only have one active office. And that’s Naples, Florida. Here’s why it’s the only state that has a governor who hasn’t shut down doing business. Now, you might scratch your head and say crit esca. They’re doing business in Pennsylvania, New Jersey. Well, let me share with you. There’s something called a Kofod condition going on right now. So Governor Wolf has mandated companies like Cordasco Financial Network to make their employees telework from home. And you were allowed to go in to work if you can’t do your daily work function from your house when you dig into that definition, that applies to a surgeon because a surgeon cancer surgery in their house. Somebody owns a gas station where a car maintenance auto body shop, they can’t do that in their home. If they have a retail business, a restaurant, they can’t commercially move it to their house. So therefore, they have to go into work. But if you don’t fall in that category, the governor’s mandate is you work from home. So hence we have forty five hundred square feet in Philadelphia sitting idle. That makes sense. Our hadn’t field office little looser in Jersey were able to use that office. We get together as employees, but we’re limited in inviting clients into those offices because there’s still a directive from the governor when there’s not a need for it. It shouldn’t happen. So we’re trying to follow the rules. Naples, Florida is now our headquarters because it’s open for business and it’s tax friendly. It’s interesting. The state of Florida charges zero tax on an S. corporation, some businesses, personal income tax, zero for individuals, and they’re open for business. We can see you in the Naples, Florida office. Can’t see in Philadelphia, can’t see on Conshohocken, can’t see it in Radnor. Cannot see you right now. But once COVID is lifted, we will be able to. But that’s a move that was made during a covered pandemic and it’s part of an expansion process. And it comes at the request of the people we serve. The people we serve would like closer, convenient locations. The people we served 10 years ago, still the same people, but a different age would enjoy coming into the city from time to time. It was an event that’s not the case any longer. So we made changes. Many businesses are making changes and they’re making small changes, changes to help them thrive and move forward. I believe this will be one of those changes for us. And I’d like to hear what changes you’re making in your personal life with decision making that’s happening on your end and decision making that might be happening within your business. My daughter is a great example. She just made a change. She had an option. She’s going to be a freshman at the University of Miami. She had the opportunity to take the first semester and learn at a place of her choice to broaden her experience out. Her choice was to enroll in a community college to share that experience, cost effective educational. She’s in Florida doing it, and she saved herself about thirty thousand dollars in tuition costs and made the smart decision of saying, I’m not going to go on campus experience because odds are it’s not going to be the same experience that most freshmen have. So because I’ve been given this opportunity, I’m going to take it. It was a struggle and an emotional one, but I’m proud of that decision. I’ll be back next week. I will give you more of the unexpected ways. COVID 19 and the pandemic is changing how people are navigating or wealth in their wealth management, as well as how some financial advisers are changing what they’re doing. I know what I’m changing. I’m expanding a footprint for more convenience, I believe, coming out of this. Tell a working teleconferencing, zooming with clients. Go to meeting with people just like you. But we’re still going to want to get together. And I want to make that getting together easier because I think people are gonna want it. We’re going to miss flesh to flesh. I’m not buying in that. The change that’s coming will be technology and that we’re all going to still be disconnected in the future. Yes, I’ve been watching reports on that and that this is going to set us up for this ongoing changed work environment where we are getting together less. I’m not buying into it. I think we come out of this. We get together more. And I’m betting on an expanded footprint so that people can meet with people to make hard emotional decisions, to learn and to get clarity through life and money. That’s the future I see. Love to hear more from you. Feel free to share your thoughts with me. asksteve@cfnplan.com. And so happy you’re part of today’s Your Life Your Wealth podcast. Always looking for good ideas. Next week we’ll be talking about the markets and specifically why there is such volatility in today’s market place, meaning stocks and bonds. Bonds are very volatile now, too.

We’re going to cover that next week. I’ll take any questions that you want me to answer with regards to the markets, whether it’s stocks, bonds or cash. Have a great week if you’re interested in learning more about applying the principles we discussed to your personal financial circumstances.

Please visit Cordasco Financial Network at cfnplan.com.